FCC Votes Along Party Lines to Limit TV Joint Sales Deals

Media ownership rules drag on

It’s a good thing the FCC started out with three items that all five commissioners could agree upon because that was the end of the harmony at Monday’s meeting. Over strong objections from both Republican commissioners, the FCC voted 3-2 to make it harder for a TV station to sell advertising time for another in the same market.

The Republican commissioners, Ajit Pai and Mike O’Rielly, also lambasted the agency for rolling up the agency’s tardy completion of its 2010 quadrennial review of media ownership rules into the 2014 review, putting off any recommendations for changes until June 30, 2016. As Pai put it, “It’s neither quadrennial nor a review.”

The partisan and contentious outcome was not unexpected, chilling the stock price of groups that have joint sales agreements, such as Sinclair Broadcast Group, Nexstar Broadcasting and LIN Media.

In a long speech, Pai tore into the commission’s move, providing numerous examples where JSAs had aided diversity and localism.

“The item does not cite a single advertiser that has complained about a JSA. It relies on the theory that [a] JSA allows one station to exert undue influence over the other. The item does not contain a single example,” Pai said.

But FCC chairman Tom Wheeler stuck to his guns that JSA’s were nothing but an end-run around the agency’s current ownership rules. He noted that the commission would offer a 90-day waiver request process to consider JSAs that furthered the commission’s goals of competition, localism and diversity.

“JSAs have been used to skirt existing rules to create market power that stacks the deck against small companies seeking to enter the broadcast business,” Wheeler said. “[This new rule] is a win for competition, and it’s a win for common sense.”

There is little doubt that the JSA rule will be challenged in court. Over the years, the FCC has approved more than 50 of them, but now it is giving stations two years to unwind them. Both Pai and O’Rielly called the JSA rule “arbitrary and capricious”—the type of legal lingo that has been used to land the FCC in court many times for its ownership rules.

Because of the numerous court challenges to the FCC’s rules, they’ve remained in limbo, essentially stuck in the 1970s when they were first created. The FCC offered no proposed changes to consider in the current rules, though it did mention it would consider lifting the ban on owning a newspaper and radio station in a market.

But June 2016 is a long way off. “Nearly a decade will pass before we update media ownership rules. It’s a damaging precedent for the agency,” said O’Rielly.

In addition to the JSA and media ownership votes, the FCC voted 5-0 to prohibit two of the top-four rated stations from jointly negotiating retransmission consent agreements. “We’re leveling the negotiating table,” said Wheeler.

The FCC also voted 5-0 to double the amount of spectrum used by cable for WiFi hotspots and another item to make some repurposed wireless spectrum available for auction in 2015.